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Gun stocks make 9 big investors richer

A number of big investors are hitting the bull's-eye on this year's big rally in gun stocks. Nine investment firms, including BlackRock, Vanguard and London Company of Virginia, are currently top five holders

A number of big investors are hitting the bull's-eye on this year's big rally in gun stocks.

Nine investment firms, including BlackRock, Vanguard and London Company of Virginia, are currently top five holders of at least one of the three publicly traded stocks with the heaviest concentration on firearms. Altogether these nine investment firms, which have consistently owned shares of Smith & Wesson (SWHC), Sturm, Ruger (RGR) or Vista Outdoor (VSTO), have made more than $500 million this year on these investments, according to a USA TODAY analysis of data from S&P Capital IQ.

Shares of these gun stocks have enjoyed powerful rallies this year as consumers continue to stockpile weapons following a somewhat slower period of demand in 2014. Investors are betting consumers fearing tighter gun control could make obtaining weapons more difficult might speed up purchases. Shares of Smith & Wesson, Sturm, Ruger and Vista Outdoor, which makes guns and ammo, are up 129%, 63% and 24%, respectively this year.

Such big stock gains are somewhat of a controversial victory as recent violence involving guns has stoked some political discussion about the suitability of firearms as investments. This week, New York City Mayor Bill de Blasio calling for "both public and pension funds and private U.S. dollars" to stop flowing into shares of weapons manufacturers.

But the shares are still mostly held by institutions. BlackRock is the investment firm with the largest gains from owning gunmakers' stocks this year - totaling $112 million so far. BlackRock is a top five holder of all three of the firearms makers - including a 9% stake in Sturm, Ruger. It's important to note, though, a gain of $112 million is practically a rounding error for BlackRock, which has $4.5 trillion as assets under management.

Vanguard, too, has done rather well with its gun positions. Like BlackRock, Vanguard is a top five holder of all three of the key gun stocks - stakes that generated a gain this year of $106 million. Vanguard owns roughly 7% of both Smith & Wesson and Sturm, Ruger. It's important to note, again, the gains are miniscule for a company with $3 trillion in assets under management.

These giant investment firms are somewhat stuck with their investments. Much of these firms' investments are made automatically based on the stocks that are contains in popular market indexes. Smith & Wesson is in several popular indexes, including the small-company Russell 2000 and the broad-market Russell 3000 indexes. Sturm, Ruger is in both of those indexes as well as the S&P SmallCap 600 and S&P 1000 indexes. Firms like Vanguard and BlackRock offer products to investors that mechanically buy all the stocks in these indexes. Such investments are great ways for investors to diversify their holdings at a low cost.

There are ways for investors to avoid investing, even indirectly in these gun companies. Socially responsible funds usually steer away from gunmakers' stocks - and even investing in the Standard & Poor's 500 wouldn't expose investors to any of these stocks.

But when the gunmakers' stocks are up this much - there probably won't be much complaining.